As if Deutsche Bank officials don't have enough to worry about this year, they also have to contend with money bleeding out of their exchange-traded products.
The burgeoning $2.4 trillion ETF industry has been kind to a lot of big players on Wall Street, with Deutsche Bank being a significant provider of the products. However, a change in the currency trade winds this year has taken a tough toll on a bank fighting to dispel worries about its overall stability.
Thus far in 2016, Deutsche's fairly expansive ETF family has seen nearly $6.7 billion in outflows, representing roughly a one-third decline in assets. The bank has moved down a notch, from 10th to 11th, among leading ETF providers, with $13.3 billion in assets currently, according to FactSet.
Exacting most of the damage has been an unwind of one of 2015's hottest trades — currency hedging, with the expectation that the U.S. dollar was on a steady trek higher and European economic growth would pick up.
With the Fed on hold and euro zone economies struggling, the currency hedge trade — ETFs that had seen sharp inflows on its expectations — has come undone. Currency-hedged ETFs overall have seen $21 billion in outflows in 2016, according to Mornginstar.